This article is from April 2017; SAP’s planned acquisition of Qualtrics for $8bn puts it in a new light, but the main points still stand.
Not quite on the scale of its earlier Summit in Salt Lake City (no Elton John at this one … mercifully), but still an impressive and well attended gig. Events like this are becoming table stakes for tech company unicorns, even if they still seem a bit dazzling to the world of market research.
Qualtrics’ latest funding round values the business at $2.5 billion. That’s 10 times expected revenue for 2017.
Clearly, the Qualtrics investors think it is onto something. They’ve put in nearly half a billion dollars. They think it’s far more valuable than market research. And they expect it to get very big, very fast.
So I wanted to learn more about Qualtrics. And I wanted to find out any lessons for the near term future of the insight, analytics and data industry.
What does all this investment and hope for future earnings say about the evolution of our market?
1. Insight Budget Will Continue to Move from Agencies to Platforms
Not entirely. And not immediately. But it has already started.
Look at the evolution of CX management as one example.
It used to be armies of postal, telephone and face-to-face satisfaction surveys (using lots of agency labour).
Then it morphed into online CSAT tracking (a lot less agency labour, but still plenty of people and time to create all that PowerPoint … three months after the fact).
Now we have CX platforms implemented client-side – with event triggers, automated alerts, closed loop case management and real time hierarchical dashboards. And far, far less on-going agency labour.
CX platforms are now core business systems. Compared to the old approach, they deliver step-change improvements in speed, capability and cost efficiency. They are mission-critical– not long term research projects that rotate between agencies every few years.
Once these systems are embedded, they are very difficult to dislodge.
Of course, there will still be demand for outsourced help with these kinds of CX programmes. Scoping and implementing software, conducting complex analysis, helping tell commercial stories. But these will increasingly be provided by teams in the platform vendors, expert consultants or freelancers in the gig economy.
Some agencies will thrive by adapting to this new model. They will fuse their service business to a high value platform or become implementer-consultants on other peoples’ tech. There will still be agency business to win – but a lot less of it to go round.
And CX is only one area where platforms look set to disrupt the traditional agency model.
Increasingly, brands will adopt their own software tools for different insight tasks. These will be for research automation, knowledge management, text analytics and other applications. Agencies will be expected to use those platforms, rather than one of their own. The brand will then own all collected data, consolidate it and learn more from it over time.
Qualtrics clearly aspires to be one of the common platforms that underpin insight and analytics – much like salesforce.com has become for CRM or Amazon Web Services for Cloud Management. Its investors are banking on that happening. But it will need to deliver on a far broader value proposition than it currently does.
Insight platforming is the number one disruptive trend for agencies and insight teams to understand.
2. Experience is the New Everything
CX management has seen huge growth over the last few years. There is a lot more to come.
It seems we are at an inflection point, like ERP in the late late nineties or CRM in the early 2000s. It’s about to become ubiquitous and dominated by a handful of vendors (think SAP or salesforce.com).
But for Qualtrics, CX management and DIY surveys on their own don’t justify that eye-watering valuation. There needs to be much more mission criticality in their offering.
Hence the new positioning and platform release: Experience Management.
Conveniently, everything’s an experience now: retail, brand, user, employee, product … pretty much every interface between organisations and customers is an ‘experience’ to be researched on the Qualtrics platform.
Yes, it’s easy to be cynical.
There is a lot of power in this ‘experience’ umbrella positioning. The software is impressive. It creates modular, programmable research. New options can be turned on at minimal incremental cost. Adopting an extra research framework will be much lower risk in the future.
Employee experience is the first, most obvious one to connect with CX.
Happy employees make happy customers, as many organisations are finally figuring out. So why not use the same platform you already use for customers to measure employee experience? Why not put all that data into the same place, so you can model the interactions between the two at scale?
Oh wait … we saw several case study presentations from brands doing just that – adidas, TetraPak, Allianz – at the Converge conference.
Brand experience? Well, see below …
Product experience? There is plenty of product and UX testing already taking place in companies with dozens of fragmented tools and vendors.
If that can be consolidated – management, data and insight all in one place – then the platform really starts to support a learning organisation.
Adding these new ‘experience streams’ has the potential to create powerful lock-in for the platform, as well as embedding it with several different user audiences.
(By the way, investors love software subscription businesses with low churn and a diversified set of end users).
Experience Management is more than a label for Qualtrics: it’s a big bet on changing how research is done.
3. Anyone Can Be a Data Analyst
For many people, the new data-driven world feels like it might leave them behind. If you don’t know SQL, R and Python you can forget doing proper work with numbers.
But there is a countervailing trend.
Analytics is getting easier for novices with new software and better user interfaces. Those of us without deep stats or modelling expertise can query more data and draw safe / sensible conclusions.
The new Qualtrics release has many of these ‘analytics for dummies’ features. Five of them will drive adoption of advanced techniques over the next few years, and they can also be seen in other platforms:
- visualisations (Tableau has been the poster-child of visual analytics, but there are many more tools in this space)
- natural language reporting (automated narrative to explain key differences in lay terms)
- text analytics (proactively suggesting buckets or code groups and applying sentiment filters)
- automated statistical tests (choosing and applying the right regression technique)
- simple, intuitive user interfaces.
Over time, more and more complex analytical tools will be simplified like this. They will be embedded in client-side insight platforms and made available to wider groups of end users.
And this obviously drives further change in the agency model.
Basic analysis and reporting as a service will reduce. Demand for premium data science consulting on complex projects will grow.
Democratisation of data analytics is coming.
4. Brand Tracking Budgets Will Shrink Even Faster Now
No disrespect to people who have made a living / built companies / sold them on the back of brand tracking.
But I never really got it.
Brand tracking is one of those market research ‘proxies’ that Jeff Bezos was aiming at in his annual shareholder letter. These days, most marketers have better, faster, more meaningful data sources available to them.
So Qualtrics’ land grab for ‘brand experience’ should spook agencies and MR teams whose main function is brand tracking.
It means that anyone running a CX programme can bolt on simple brand modules. They can set them up as dips or regular waves, and add non customers from the integrated sample platform.
Costs will drop, speed will improve, and centralised data will increase analytical options.
Bye bye expensive brand tracking. I won’t miss you.
5. Insight Technology Will Finally Get a Decent User Experience
I’ve always found market researchers a bit bewildering.
They can agonise over the impact of tiny wording changes between tracking waves. Or possible differences in response patterns across devices. But until recently, they hardly cared about the user interface on their survey tools.
Experiences like this are still commonplace, as are respondents screaming, “MY EYES, MY EYES” as they beat the screen with their fists.
But things are starting to change. Surveys are catching up with the rest of the digital mainstream. UI – for users and respondents – is belatedly getting much more attention.
For researchers, back-end interfaces have generally remained pretty shocking. But there are some encouraging signs. The user experience on Qualtrics, Medallia, Zappistore and a few others is on a par with the best marketing technology SaaS tools. As accounting platform Xero has shown, no application is too dull to make a virtue out of a great interface.
And a great product experience is all about getting people hooked. A great UI is critical for driving adoption, engagement and stickiness with your users. Handy if you need to maximise growth, minimise churn and live up to a huge valuation.
User experience is the new client service.
A Final Thought About Event Marketing Budgets
Lots of funding pays for big splash events.
Qualtrics chose to spend some of their Converge budget on Lewisham legend Troy. I have to admit – jaw-droppingly awesome magic show.
It also pays for swag. Pink sunglasses and branded beanies that can make even the most stylish dressers look a fool.
Money well spent? You decide.